Amgen will spend approximately $2.7 billion to dive deeper into China’s growing market for oncology treatments by taking a 20.5% stake in BeiGene—part of a global collaboration with the Beijing-based biotech that will include commercializing three marketed Amgen cancer drugs in China, and developing another 20 candidates in Amgen’s oncology pipeline.

Under the collaboration, BeiGene will commercialize Amgen’s Xgeva® (denosumab), which was approved in May by China’s National Medical Products Administration (NMPA) for adults and skeletally mature adolescents (defined as having at least one mature long bone and weigh ≥45 kg [99 pounds]) with giant cell tumor of bone that is unresectable or where surgical resection is likely to result in severe morbidity.

Xgeva is also in development in China for the prevention of skeletal-related events in cancer patients with bone metastases.

Also within China, BeiGene will commercialize Amgen’s Kyprollis® (carfilzomib), which is in late-stage development for patients with multiple myeloma; and Blincyto® (blinatumomab), which is in late-stage development for adult patients with relapsed or refractory acute lymphoblastic leukemia (ALL).

Commercialization activity will run for five or seven years, during which time Amgen and BeiGene said they will split profits and losses equally.

After that commercialization period, BeiGene will have the right to retain one of the three Amgen marketed drugs, while being entitled to royalties on sales in China for an additional five years on the products it did not retain, the companies said.

Under their collaboration, BeiGene agreed to jointly develop 20 Amgen oncology pipeline assets globally—including targeted small-molecule agents such as AMG 510, a first-in-class investigational KRAS G12C inhibitor, as well as BiTE® (Bispecific T cell Engager) antibodies, for solid and hematologic malignancies.

Eight treatments by 2020

“We are thrilled to join forces with Amgen to realize the development and commercialization of this broad oncology pipeline with the aim of benefitting patients around the world,” John V. Oyler, BeiGene’s co-founder, CEO, and chairman, said yesterday in a statement issued after the close of financial markets. “This alliance expands the portfolio available to our market-leading China commercial team, led by Xiaobin Wu, PhD, with the potential to bring as many as eight internally discovered and in-licensed innovative treatments to cancer patients by the end of 2020.”

Investors responded to the collaboration with a buying surge that sent BeiGene’s stock price on the Hong Kong Stock Exchange soaring 32%, to HK$110 ($14.04) at the close of trading today. Amgen shares on Nasdaq rose 1.5% as of 11:19 a.m., to $216.45.

Amgen and BeiGene agreed to co-fund global development costs, with BeiGene contributing up to $1.25 billion worth of development services and cash over the term of the collaboration. BeiGene will be entitled to receive royalties from global sales of each product outside of China, except for AMG 510.

For each Amgen pipeline asset approved in China, BeiGene will receive commercial rights for seven years from approval, during which time the parties will share equally in profits and losses. BeiGene is also entitled to receive royalties from sales in China for five years after the seven-year commercial term, the companies said.

BeiGene will also have the right to retain approximately one of every three approved pipeline assets, up to a total of six, other than AMG 510, for commercialization in China, during which time the parties will share in profits and losses.

“This strategic collaboration with BeiGene will enable Amgen to serve significantly more patients by expanding our reach in the world’s most populous country. We’ve chosen an innovative strategic collaborator that can offer commercial and clinical reach with global quality standards,” stated Robert A. Bradway, Amgen’s chairman and CEO.

Growth opportunity in oncology

As with other U.S. and European biopharmas, Amgen has identified as a growth opportunity China’s approximately four million people diagnosed with cancer annually and 2.3 million deaths from the disease each year.

Since 2011, a year before Bradway became CEO, Amgen has expanded its global presence from about 50 to 100 countries. Amgen has sought for years to advance biopharmaceutical discovery and translational research in China. The company established a Chinese affiliate in 2012, and a year later announced plans for an R&D center at ShanghaiTech University that opened in 2014. That R&D center relocated in 2017 to a new permanent lab at Zhangjiang Hi-Tech Park, located near top-tier research institutes and universities.

Last year, Amgen won NMPA approval to market its first drug in China, the PCSK9 inhibitor Repatha® (evolocumab) for adults and adolescents over 12 years old with homozygous familial hypercholesterolemia (HoFH). In January, NMPA also authorized Repatha for adults with established atherosclerotic cardiovascular disease to reduce the risk of myocardial infarction, stroke, and coronary revascularization.

Amgen agreed to pay BeiGene $174.85 per American Depositary Share (ADS) in BeiGene—a 36% premium to BeiGene’s 30-day volume-weighted average share price as of Wednesday.

Amgen will receive one seat on BeiGene’s Board of Directors.

The boards of both companies have approved the transactions, which are expected to close in the first quarter of 2020, subject to approval by a majority of BeiGene shareholders pursuant to the listing rules of the Hong Kong Stock Exchange, the expiration or termination of applicable waiting periods under applicable antitrust laws, and satisfaction of other customary closing conditions.

BeiGene has already received commitments from shareholders holding approximately 40% of its outstanding shares to vote in favor of the transactions, the companies disclosed.

“Cancer is a leading cause of death in China and will only become a more pressing public health issue as the Chinese population ages,” Bradway added. “We look forward to working with BeiGene to make a meaningful difference in the lives of millions of cancer patients in China and around the world.”

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